Montgomery Ward & Co., Inc.

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IN THE l\iatter OF J\IOKTGO.MEHY WARD & CO., INC.

COXSEXT onder, ETC. : IX REGARD TO 'fhe ALLEGED VIOLATION OF THE FEDERAL TRADE COMMISSION ACT Docket 8200. Complaint, Dec. 1960-Decision, June 14, 1961 Consent order requiring a large Chicago man order retailer, to cease making deceptive price and savings claims for its automobile tires, parts, and accessories, through such practices as setting out as "list prices " in newspaper advertisements, amounts substantially in excess of actual retail prices, and representing the difference between such "list" prices and the advertised sale prices as sa,ings for the buyer. CO::IPI,AINT Pursuant to the provisions of the Federal Trade Commission Act, and by virtue of the authority vested in it by said i..ct the Federal Trade Commission, having reason to believe that I\iontgomery ,Yard & Co. , Inc., a corporation, hereinafter referred to as responrlent, has violated the provisions of said Act, and it appearing that a proceeding by it in respect thereof ,yould be in the public interest, hereby issues its complaint, stating its charges in that respect as follows:

PAHAGllAPJI 1. Re-sponclent :Montgomery ,Yard & Co. , Inc. , is a corporation organized, existing and doing business under and by virtue of the Jaws of the State of Illinois, with its principal place of business located at 619 Divest Chicago A venue, Chicago, Illinois. PAR. 2. Hesponclent is nmv, and for some years last past has been\ engaged in the advertising, offering for sale and snJe many articles of merchandise, including automobile tires. PAR. 3. In the C011rso and conduct of its business, respondent now causes, and for some time Inst past has caused, said merchandise including its automohi1e tires, when s01d, to he shipped from its place of business in Chicago, Illinois to purchasers thereof located in other States of the United States and in the District of Columbia. Respondent aho maintains retail stores in various State,s of t.he United States, including the States of J\1aryJand and Virginia. Respondent in some. instances Cfillses said automobile tires to be shipped from the manufacturer thereof to these retail stores, while in other instances respondent causcssf\,id t.ires to be shipped from its warehouses located in various states to said retail stores located in other states, a.nd maintains, and at all times mentioned herein has maintained, a substantial course of trade in said tires in com- __ _ _, 1112 FEDERAL TRADE COMMISSIOK DECISIONS Complaint 58 F.

meree, as "commerce ' is defined in the Federal Trade Commission Act.

PAR. 4. In the course and conduct of its business as aforesaid and for the purpose of inducing the purchase of its said tires in commerce, respondent has engaged in the practice of using fictitious retail prices in advertisements published in various news papers. Among and typical of such practice, but not all inclusive thereof, are the following statements:

Nylon 64 BlackwalJs-tubeless Tube-type price ' List price ' Sale price with each before ;I eachList pricebeforeSalewith Size ' trade in plus ' tracle b plus tracie plus trade-in-plll eIClsetax I excise tax 8;!Clsetax excise tax 7G-15____ 1G-1.'i _m----_-- 29,50 22. 88 27.25. 751I 17.20. :: 28 it : : ::1 !!! I Ooly :::: '" buy whitewall in your SIze.

Air cushion tubeless black Tube-type-blaek price: Sale price ist price e . Sale Size I. Listeach pribefore Vit' WJt:1 eacb bdore ' ' trade-in plus. trade-in plus trade-in plus trade-in plus e.xcisetax e.xCIsetax eXclsetU:: : exelsetax 70- L 15. H8 ' 12, 95 : 18. 88 : 23. 9,'i 16. 1;0-15---- !iH ' 20. 10- ----------___n---- ----u -- -29.25.22. 26.6519. 18. 50-14 15 16. 00-140- -----------------22.26. 95 18. $3.00 more buys a whitewall in your size.

\R. 5. Through the use of the aforesaid statements: and others similar thereto but not included herein, respondent represented directly or by implication:

1. That the amounts set out under "list prices:' were the prices at which the merchandise advertised had been usually and customarily sold at retail by respondent in the recent regular course of business. 2. That purchasers of the tires advertised were afforded savings of the differences between higher " list prices" and the advertised sales prices.

PAR. 6. The aforesaid statements and representations were: and are, false, misleading and deceptive.

1. The amounts set out under " list prices" were substantially in excess of the prices at which the advertised merchandise had been usually and customarily sold at retail by respondent in the recent regular course of business.

MOXTGO 1ERY WARD & CO. , INC. 1113 1111 Decision 2. Purchasers of the advertised tires were not afforded savings of the differences between the "list prices" and the advertised sales pnces.

PAR 7. In the conduct of its business, at all times men60ned herein, respondent has been in substantial competition, in commerce, with corporations, firms and individuals in the sale of automobile tires.

PAR. 8. The use by respondent of the false, misleading and deceptive statements, representations and pradices, as aforesaid, has had and now has, the capacity and tendency to mislead members of the purchasing public into the erroneous and mistaken belief that said statements and representations were, and are, true and into the purchase of substantial amounts of respondent's automobile tires by reason of said erroneous and mistaken belief. As a consequence thereof, substantial trade in commerce has been unfairly diverted to respondent from its competitors and substantial injury has thereby been, and is being, done to competition in commerce. PAR. 9. The aforesaid acts and practices of respondent, as herein alleged, were, and are, all to the prejudice and injury of the public and of respondent's competitors, and const.ituted: ana now constitute unfair and deceptive acts and practices and unfair methods of competition, in commerce, within the intent and meaning of the Federal Trade Commission Act.

Mr. John W. Brookfield, Jr. for t.he Commission. Mr. D. L. Diclc80n of Chicago, 111., for respondent. INITIAL DECISION nY WALTER R. ,JOHNSON, HEARING EXAMINER In the complaint. dated December 6, 1960, the respondent is charged with violat.ing the provisions of the Federal Trade Commission Act.

On April 7, 1961, the respondent entered into an agreement with counsel in support of the complaint for a consent order. Under the foregoing agreement, the respondent admits the jurisdictional facts alleged in the complaint. The parties agree, among other things, that. the cease and desist order there set forth may be entered without further notice and have the same force and effects as if entered after a full hearing and the document includes a waiver by the respondent of all rights to challenge or eont.est t.he validity of the order issuing in accordance therewith. The agreement further recites t.hat it is for settlement. purposes only, does not constitute an admission by t.he respondent that it has violated Order 58 F.

the law as alleged in the complaint, and that said complaint may be used in construing the terms of the order. The hearing examiner finds that the content of the agreement meets aij of the requirements of section 3.25 (b) of the Rules of the Commission.

The hearing examiner being of the opinion that the agreement and the proposed order provide an appropriate basis for disposi tion of this proceeding as to aij of the parties, the agreement is hereby accepted and it is ordered tlllLt the agreement shall not become a part of the oflicial record of the proceeding unless and until it becomes a part of the dccision of the Commission. The rollowing jurisdictional findings arc made and the following order issued:

1. Respondent :\Iontgomery IVard & Co., Inc. is a corporation existing and doing busine.ss under and by virtue of the laws of the State of IIJinois, with its offcc and principal place of business located at 619 Divest Chicago Avenue, in the City of Chicago, State of Ilinois.

2. The Federal Trade Commission has jurisdiction of the subject matter of this proceeding and of the respondent, and the proceeding is in the public interest.

ORDER It is ordered That respondent J\fontgomery 'Yard & Co. , Tnc., a corporation, and its offcers, agents, representatives and e,mployees, directly or through any corporate or other device, in connection with the offering for sale, sale or distribution of automobile tires automotive parts and automotive acecssories in commerce, as "commerce" is defined in the Federal Trade Commission Act, do forthwith cease and desist from:

1. Representing, directly or by implication, that any amount is respondent' s usual and customary retail price of said products when such amount is in excess of the price at ,which said products have been usually and customarily sold at retail by respondent in the recent regular course of its business.

2. Representing, directly or by implication, that any saving is afforded in the purchase of said products unless the price at which they ate offered constitutes a reduction from the price at which such products have been usually and customarily sold by respondent in the recent regular course of its business. 3. )fisrepresenting in any manner the amount of savings available to purchasers of respondent's said products, or the amount by which the price of said products is reduced from the pric.e at ACME SPARKLER & SPECIALTY COMPANY ET AL. 1115 1111 Complaint which said products have been regularly and customarily sold by respondent in the recent regular course of business. 4. Using the word "list" in connection with the price of said products unless it is the price at which said products have been usually and customarily sold by respondent in the recent regular course of its business.

DEClSIO OF THE CO IlIIS8IOX AND ORDER TO FILE REPORT OF C03-fPLIANCE Pursua.nt to section 3.21 of the Commission s Rules of Practice the initial decision of the hearing examiner shall, on the 14th day of June 19(31, become the decision of the Commission; and, accordingly: It is ordered That respondent herein shall, within sixty (60) days after service upon it of this order, file with the Commission a report in writing setting forth in detail the manner and form in which it has complied \i-ith the order to ceftse and desist.